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ABB doubles full-year sales outlook as recovery gathers pace

Stock Markets5 minutes ago (Jul 22, 2021 02:05AM ET)

(C) Reuters. FILE PHOTO: The logo of Hitachi ABB is seen at an office building in Zurich, Switzerland September 10, 2020. REUTERS/Arnd Wiegmann

By John Revill

ZURICH (Reuters) – ABB doubled its full-year sales outlook on Thursday, in the latest sign of a global manufacturing revival, with the engineering company also pointing to an improvement in oil and gas sectors in the second half.

The maker of factory drives and robots said it now expected full-year comparable revenues to rise by just below 10%, above its previous view for a 5% increase.

The improved outlook came after double-digit percentage growth in orders across all of ABB’s businesses in the second quarter, as factories ramped up production after last year’s pandemic-driven downturn and customers rebuilt inventories.

Process industries – helped by the higher oil prices which enable them to invest in new equipment – are expected to see a revival during the second half of 2021, ABB added.

During its second quarter, ABB’s revenues rose 21% from 2020’s coronavirus driven nadir to reach $7.45 billion, beating estimates for $7.24 billion.

ABB reported net profit rising 136% to $752 million, beating estimates of $661 million in a company-gathered consensus of analyst forecasts.

Its operational EBITA margin rose by 440 basis points to 15%, the highest level since 2008 as cost cuts and reductions in travel spending boosted profitability.

ABB also raised its profitability outlook, saying it expected a “strong” pace of improvement towards its goal of reaching the upper half of a range of 13% to 16% by 2023. Previously it had expected improvement to be only “steady”.

Chief Executive Bjorn Rosengren, who has overseen a steep rise in ABB’s share price since taking over in March 2020, said he was encouraged by a “clearly improved” performance.

“The strong upturn in operational EBITA margin reflects the recovery in demand, in combination with increased internal efficiency and the strength of ABB’s electrification and automation offerings,” he said in a statement.

ABB expects tightness to continue in the supply of certain components, such as semiconductors, he added, and expects to announce a divestment during the third quarter.

Rosengren unveiled plans last year to offload three business units – turbocharging, mechanical power and power conversion – that together generate about 6% of annual revenue, but did not say which would be the first to announce a deal.

ABB doubles full-year sales outlook as recovery gathers pace

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